We value noncash compensation at its CMV at the time of transfer or contract for sale, whichever is earlier. The value of compensation is the gross value paid or to be paid. Expenses attributed to the sale do not reduce the value of the compensation.

We value compensation received in the form of ISM at its full CMV (monthly or annually depending upon the agreement) multiplied by the length of time for which it is to be provided under the agreement. We do not cap the value of the compensation at the value of the one-third reduction (VTR) or presumed maximum value (PMV).

Example: Determining whether ISM applies

Mr. Thomas transfers $30,000 cash to his sister based on a written contract that she would provide him with food and shelter for 5 years. The sister values the food and shelter at $500 per month. The CR develops Mr. Thomas' living arrangements and determines that he has a flat fee arrangement with his sister and required to pay $500 per month. The food and shelter for 5 years is worth $30,000 (5 years x $6,000 per year). Therefore, Mr. Thomas received FMV for the $30,000 he transferred. ISM is not counted because the Mr. Thomas has prepaid for his food and shelter with the $30,000 he transferred. For procedure on determining an individual’s contribution toward household operating expenses, see SI 00835.480D.

NOTE: Using the same facts as in the preceding example, assume that the CR is conducting a redetermination 2 years later and the sister providing the ISM alleges that the value of the food and shelter she provides has increased to $650 per month. Since Mr. Thomas entered into an agreement that the $30,000 covered his food and shelter for 5 years, do not re-open the LA/ISM determination due to breakpoints that may occur in that household such as an increased flat fee charge. Assume that the individual is not getting ISM for the duration of the 5 years unless the individual moves from that household to a new residence.

We determine the value of services provided to the transferor based on the CMV of the services (monthly or annually) and their frequency and duration under the agreement.

Example: Determining the value of services

In exchange for $9,000 cash, the individual contracts for yard maintenance services for 5 years. The maintenance company charges $150 per month ($1,800 per year). Five years of maintenance at $1,800 per year equals $9,000.

We value compensation in the form of assumption of the transferor's legal debt at the outstanding principal amount. Interest payments are not compensation.

Example: Determining the value of compensation when the responsibility of legal debt is transferred

The individual had ownership interest in a piece of real property with a CMV of $12,000. The individual had equity of $2,000 and owed $10,000. The individual alleges that he could not keep up the payments and transferred title to the property to his brother in exchange for his brother assuming responsibility for the real estate contract. The value of the compensation received is $10,000 which is the amount of the outstanding debt. The uncompensated value is $2,000 — the difference between the CMV and the outstanding debt. For information on documenting assumption of legal debt, see SI 01150.005D.5. in this section.

When the individual attempts to sell a resource on the open market, generally he or she offers it at a particular price. When the sale is made, the individual may accept compensation that is lower than the original asking price. If the property was sold on the open market, this difference between the asking price and the sale price is not uncompensated value. The price paid on the open market establishes the CMV for that item. If the property was sold on the open market, assume that the individual received FMV. However, if the property was not sold on the open market (e.g., it was sold to a relative) see SI 01150.005D.6. in this section.

If an individual gave away a resource because he or she was unable to sell it at the estimated CMV, it may indicate that the asking price was too high, but the resource still has a value. However, in rare cases the resource may have no value. Although it would still be considered a resource even if it has no value, transferring a resource with no value does not result in any uncompensated value. To develop the issue of resources with no value, see SI 01140.044. If the individual still owns the resource and alleges not being able to sell it, inform the individual about conditional benefits. For conditional benefits, see SI 01150.200.

To determine the value of the compensation the individual receives in the form of ISM follow the instructions in SI 00835.001. Use the actual value of the ISM. For the definition of actual value, see SI 00835.020B.1. Do not use the value of the one-third reduction (VTR) or the presumed maximum value (PMV) to set the value of the compensation.

Obtain a statement either signed or recorded on a Report of Contact (DROC) screen from the individual providing the ISM to verify that he or she is providing the ISM in exchange for the transferred resource. On MSSICS, use the Person Statement (DPST) screen. On paper, use an SSA-795 (Statement of Claimant or Other Person) or the SSA-8011-F3 (Statement of Household Expenses and Contributions) if used to document the ISM determination.

If the agreement states that the receiver of the property will provide ISM for the life of the eligible individual, you should determine the total value of ISM using the table in SI 01150.005F. Multiply the yearly CMV of the ISM provided by the figure in the “Years of Life Remaining” column which corresponds to the age (or next lower age) of the eligible individual as of the last birthday at the time the resource was transferred.

Example 1: Total value of ISM results in FMV compensation

Valerie Payne transferred nonhome real property valued at $185,000 to her sister. As compensation, her sister agreed to provide Ms. Payne with room and board in the sister's home for the rest of Ms. Payne's life. ISM development showed that her sister's total household expenses were $1,500 per month. The household consisted of 3 persons, including Ms. Payne who was age 53 at the time of the transfer. The CMV of the ISM was $6,000 per year ($1,500/3 = $500 per month X 12 months = $6,000). Then, $6,000 X 31.61 (average years of life remaining at age 50) = $189,660 compensation. In this case, Ms. Payne received FMV for the transferred resource. We do not count ISM because the individual prepaid for her own food and shelter with the value of the home she transferred. For procedure on determining an individual’s contribution toward household operating expenses, see SI 00835.480D.

Example 2: Total value of ISM results in uncompensated value

Assume the same case facts as Example 1 except that Ms. Payne is 80 years old at the time of the transfer. As in Example 1 the ISM is worth $6,000 per year. At 80 years of age the life expectancy table indicates 7.16 years. Multiplying 7.16 years times $6,000 results in compensation of $42,960. In this case there is uncompensated value of $142,040 ($185,000 minus $42,960). Therefore, Ms. Payne is subject to a period of ineligibility for SSI because she transferred the house for less than FMV.

Contact at least one local knowledgeable source in addition to the provider to verify the CMV of the services if the services were not purchased on the open market. For future contributions alleged, see SI 01150.005D.6. Document your determination of the CMV of the services using either the File Documentation Notes section of the Property/Cash Given or Sold (RGIV) page, the DROC screen on MSSICS, or an SSA-5002 (Report of Contact).

Verify the agreement to provide services by getting a copy of the services contract or a signed statement from the person getting the transferred resource that shows the type, frequency, and duration of the services provided. If the agreement does not specify the frequency, but rather that the person receiving the resource will provide services on an “as needed” basis, the statement must include his or her expectations as to the frequency of the services and the basis for the expectation.

Example: Compensation Received as Services

Roy Linden transferred livestock valued at $2,000 to his neighbor. As compensation, the neighbor agreed to put a new roof on Mr. Linden's home. The claims representative (CR) contacted a local roofing contractor and found that the cost of a new roof would be about $2,100. The compensation Mr. Linden received was valued at $2,100. Therefore, the CR determines that Mr. Linden received FMV for his livestock.

NOTE: The fact that the new roof's value ($2,100) exceeded the value of the livestock ($2,000) does not result in income to Mr. Linden for SSI purposes. For information on conversion or sale of a resource, see SI 00815.200.

If the agreement provides services for the life of the claimant or recipient, determine the yearly value of the services. When determining the value of compensation for life services, use the life expectancy table in SI 01150.005F.